8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 8-K

Current Report
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): October 8, 2009

MRV COMMUNICATIONS, INC.

(Exact name of registrant as specified in its charter)

Delaware(State or other jurisdiction of
incorporation)

001-11174 (Commission File No.) 06-1340090(IRS Employer Identification No.)

20415 Nordhoff Street
Chatsworth, California (Address of principal executive offices)
91311 (Zip Code)

Registrant’s telephone number, including area code
(818) 773-0900

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

oWritten communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

oSoliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

oPre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

oPre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 Entry into a Material Definitive Agreement.

On October 8, 2009, Spencer Capital Management, LLC, Spencer Capital Partners, LLC, Value Fund Advisors, LLC, Boston Avenue Capital, LLC, Yorktown Avenue Capital, LLC and Spencer Capital Opportunity Fund, LP, Charles M. Gillman, Michael J. McConnell and Kenneth H. Shubin Stein (collectively “Value Investors for Change”), and MRV Communications, Inc. (the “Company”) entered into an agreement (the “Settlement Agreement”) to settle matters pertaining to the contested election of directors to the Company’s Board of Directors (the “Board”) at the Company’s 2009 Annual Meeting of Stockholders (the “Annual Meeting”).

Value Investors for Change previously filed definitive proxy materials in connection with its nomination of a slate of eight nominees for election to the Board at the Annual Meeting.  As of October 8, 2009, Boston Avenue Capital, LLC and Spencer Capital Opportunity Fund, LP beneficially own in the aggregate 1,937,860 shares of the Company’s common stock, par value $0.0017 per share.

Pursuant to the Settlement Agreement, Value Investors for Change will withdraw its director nominations with respect to the Annual Meeting and will not solicit proxies or make other proposals at the Annual Meeting.  In addition, the Company has received the irrevocable resignations of Harold Furchtgott-Roth, Guenter Jaensch and Daniel Tsui, effective immediately prior to the Annual Meeting.  Further, the Board has agreed to nominate Charles M. Gillman, Michael J. McConnell and Kenneth H. Shubin Stein (collectively, the “Designated Directors), each of whom was previously included in the slate proposed by Value Investors for Change, together with Baruch Fischer, Joan Herman, Michael Keane, Noam Lotan, Shlomo Margalit, Igal Shidlovsky and Philippe Tartavull (together with the Designated Directors, the “2009 Nominees”).  The Company has also agreed that if elected, Messrs. Gillman and Shubin Stein will become members of the Audit Committee of the Board which will be comprised of a total of four members, Dr. Shubin Stein will become a member of the Nomination and Governance Committee of the Board which will be comprised of a total of three members, and Mr. Gillman will become a member of the Compensation Committee of the Board which will be comprised of a total of three members.  In addition, the Board has agreed that it will select a new Chairman of the Board, Audit Committee and Compensation Committee from amongst Joan Herman, Michael Keane, Charles M. Gillman, Michael J. McConnell, Kenneth H. Shubin Stein and Philippe Tartavull, assuming such nominees are elected.  The Company further agreed that the sizes of the Board would not be increased or the sizes of the Committees changed, and that Value Investors for Change nominees would be entitled to one-third representation on any new committees until the 2011 Annual Meeting.  Finally, the Company agreed to reimburse Value Investors for Change for up to $1,000,000 of its reasonable, documented out-of-pocket costs.

The foregoing description of the Settlement Agreement is not complete and is qualified in its entirety by the full text of such agreement, which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated by reference herein.

Item 2.02 Results of Operations and Financial Condition

On October 12, 2009, the Company issued a press release announcing financial results for the fiscal year ended December 31, 2008.  A copy of the Company’s press release is attached hereto as Exhibit 99.1 and incorporated herein by reference.

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

(b)  Pursuant to the Settlement Agreement described in Item 1.01 to this Current Report on Form 8-K, the Company has received the irrevocable resignations of Harold Furchtgott-Roth, Guenter Jaensch and Daniel Tsui, effective immediately prior to the 2009 Annual Meeting.

Item 9.01.  Financial Statements and Exhibits

Exhibit Number	Description
10.1	Agreement, by and among Spencer Capital Management, LLC, Spencer Capital Partners, LLC, Value Fund Advisors, LLC, Boston Avenue Capital, LLC, Yorktown Avenue Capital, LLC and Spencer Capital Opportunity Fund, LP, Charles M. Gillman, Michael J. McConnell, Kenneth H. Shubin Stein and MRV Communications, Inc., dated as of October 8, 2009.
99.1	Press release of MRV Communications, Inc., dated October 12, 2009.

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SIGNATURE(S)

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	MRV COMMUNICATIONS, INC.
Date: October 14, 2009	By:	/s/ Jennifer Hankes Painter
		Jennifer Hankes Painter
		VP, General Counsel and Chief Compliance Officer

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EXHIBIT INDEX

Exhibit Number	Description
10.1	Agreement, by and among Spencer Capital Management, LLC, Spencer Capital Partners, LLC, Value Fund Advisors, LLC, Boston Avenue Capital, LLC, Yorktown Avenue Capital, LLC and Spencer Capital Opportunity Fund, LP, Charles M. Gillman, Michael J. McConnell, Kenneth H. Shubin Stein and MRV Communications, Inc., dated as of October 8, 2009.
99.1	Press release of MRV Communications, Inc., dated October 12, 2009.

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EX-10.1

Exhibit 10.1

AGREEMENT

This Agreement (this “Agreement”) is made and entered into as of October 8, 2009, by and among Spencer Capital Management, LLC, Spencer Capital Partners, LLC, Value Fund Advisors, LLC, Boston Avenue Capital, LLC, Yorktown Avenue Capital, LLC and Spencer Capital Opportunity Fund, LP, Charles M. Gillman, Michael J. McConnell and Kenneth H. Shubin Stein (collectively “Value Investors for Change”), and MRV Communications, Inc., a Delaware corporation (the “Company”).

RECITALS

A.            The Company’s 2009 Annual Meeting (the “2009 Annual Meeting”) is scheduled to be held on November 11, 2009.

B.            Boston Avenue Capital, LLC and Spencer Capital Opportunity Fund, LP beneficially own in the aggregate 1,937,860 (the “Dissident Shares”) of the Company’s common stock, par value $0.0017 per share (“Shares”) and have, together with the other members of Value Investors for Change and five additional director nominees, filed a definitive proxy statement with the Securities and Exchange Commission (the “SEC”) on October 7, 2009 to nominate eight directors at the 2009 Annual Meeting (the “Dissident Proxy Statement”).

C.            Value Investors for Change and the Company (each a “Party,” and collectively, the “Parties”) hereto agree that it is in the best interests of all stockholders of the Company to come to an amicable agreement with respect to the 2009 Annual Meeting.

NOW THEREFORE, the parties hereby agree as follows:

1.                  The Company agrees, and represents and warrants that the Board of Directors of the Company (the “Board”) has agreed, that Charles M. Gillman, Michael J. McConnell and Kenneth H. Shubin Stein (the “Designated Directors”) will be nominated as directors of the Company, together with Baruch Fischer, Joan Herman, Michael Keane, Noam Lotan, Shlomo Margalit, Igal Shidlovsky and Philippe Tartavull (collectively, the “2009 Nominees”), for election at the 2009 Annual Meeting.  The Company shall use all reasonable best efforts to ensure that the Designated Directors are elected at the 2009 Annual Meeting, including, without limitation, recommending that the Company’s stockholders vote in favor of the election of the Designated Directors and causing all proxies received by the Company to be voted in favor of the Designated Directors, unless the proxy provides otherwise.  The Company further agrees, and represents and warrants that the Board has agreed, that no later than 30 calendar days following the 2009 Annual Meeting, the Board will select from amongst Joan Herman, Michael Keane, Philippe Tartavull and the Designated Directors (the “New Independent Directors”), the Chairman of the Board.

2.                  If for any reason, any of the 2009 Nominees are not elected at the 2009 Annual Meeting, the Parties agree, and the Company represents and warrants that the Board has agreed, that following the 2009 Annual Meeting, the Board will be reconstituted, to the extent permitted by law to include only the 2009 Nominees, which shall be effected, to the extent necessary, by the resignation of any directors who hold over in office under Delaware law who are not 2009 Nominees and the appointment of any 2009 Nominees who were not elected at the 2009 Annual Meeting.  If additional persons who are not 2009 Nominees are elected at the 2009 Annual Meeting, the Parties agree to renegotiate this

Agreement in good faith, including Sections 5, 6 and 7 hereof, to effectuate the intent of this Agreement.  If, during the period of time beginning on the 2009 Annual Meeting date and running to the 2010 Annual Meeting, any or all of the Designated Directors (i) resign or are otherwise unable or unwilling to serve as a director of the Company or (ii) are removed in accordance with the Company’s Amended and Restated Certificate of Incorporation or Bylaws (each as may be subsequently amended and restated), Value Investors for Change shall be entitled to nominate an individual or individuals reasonably deemed to be qualified by the Board (after taking into consideration the Company’s criteria for the selection of directors, but in no event may the Company veto more than two recommendations from the five remaining director nominees from the Dissident Proxy Statement) to serve on the Board in his or their place (each, a “Replacement Nominee”) and the Board shall promptly appoint each Replacement Nominee to the Board to serve for the remainder of the applicable term.  Such Replacement Nominee will be considered a Designated Director for purposes of this Agreement.

3.                  The Company represents and warrants that it has received the irrevocable resignations of Harold Furchtgott-Roth, Guenter Jaensch and Daniel Tsui, effective immediately prior to the 2009 Annual Meeting.  The Company agrees, and represents and warrants that the Board has agreed, that if any of the Designated Directors become unable to serve prior to the 2009 Annual Meeting, Value Investors for Change shall be entitled to designate an individual reasonably deemed to be qualified by the Board (after taking into consideration the Company’s criteria for the selection of directors, but in no event may the Company veto more than two recommendations from the five remaining director nominees from the Dissident Proxy Statement) that the Board will then nominate for election or elect to fill such vacancy.

4.                  Following (i) the Board’s nomination of the Designated Directors to the Board no later than (5) days following the date of this Agreement, (ii) the filing by the Company of its Annual Report on Form 10-K for the year ended December 31, 2008 and (iii) the payment of the fees specified in paragraph 8 of this Agreement, Value Investors for Change agrees to withdraw its nominations with respect to the 2009 Annual Meeting and not to solicit proxies or make any other proposals at the 2009 Annual Meeting.  The Company agrees not to make any other proposals at the 2009 Annual Meeting other than the ratification of the selection of the registered public accounting firm. Value Investors for Change agrees to vote all of the Dissident Shares at the 2009 Annual Meeting for the Designated Directors and the foregoing proposal.  The Company represents and warrants that the Company’s officers and directors have agreed to vote all of their Shares for the Designated Directors.

5.                  The Company agrees, and represents and warrants that the Board has agreed, that Messrs. Gillman and Shubin Stein will become members of the Audit Committee of the Board which will be comprised of a total of four members, Mr. Shubin Stein will become a member of the Nomination and Governance Committee of the Board which will be comprised of a total of three members, and Mr. Gillman will become a member of the Compensation Committee of the Board which will be comprised of a total of three members.  The number of members of each of these committees will be set at the number specified above until the 2011 Annual Meeting unless at least eight members of the Board approve an increase. With respect to the Chairman positions of the Audit Committee and Compensation Committee, one of the New Independent Directors will be appointed as Chairman to each of these committees at the first Board meeting following the 2009 Annual Meeting.

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6.                  If at any time subsequent to the date of this Agreement until the 2011 Annual Meeting, the Board creates an additional committee of the Board or a subcommittee of an existing committee (each an “Additional Committee”), the Board, or applicable Committee, shall appoint to the Additional Committee that number of Designated Directors, provided that there are Designated Directors on the Board, necessary such that the appointed Designated Directors will constitute not less than one-third of the members of the Additional Committee.  The Designated Directors shall be entitled to determine which Designated Director(s) shall serve on any Additional Committee.  Provided that there are enough Designated Directors on the Board, the proportion of Designated Directors in each of the Additional Committees will be set at the proportion specified above until the 2011 Annual Meeting unless at least eight members of the Board approve a decrease.  To the extent that an Executive Committee is in existence as of the date of this Agreement, the Company agrees, and represents and warrants that the Board has agreed, that Messrs. Gillman and Shubin Stein will become members of the Executive Committee of the Board which will be comprised of no more than five members until the 2011 Annual Meeting unless at least eight members of the Board approve an increase.

7.                  The Company agrees, and represents and warrants that the Board has agreed, that until the 2011 Annual Meeting of the Company, the size of the Board will not be increased beyond ten members unless at least eight members of the Board approve the increase.

8.                  Within two (2) business days after the date hereof, the Company shall reimburse Spencer Capital Management, LLC, on behalf of Value Investors for Change, for its reasonable and documented out-of-pocket expenses incurred prior to the execution hereof in connection with the Delaware litigation concerning the 2009 Annual Meeting, the nominations, the negotiation of this Agreement, and with regards to the Dissident Proxy Statement, (i) the preparation and filing of all filings required by the Securities Exchange Act of 1934, and the rules and regulations promulgated thereunder, (ii) the printing expenses of the Dissident Proxy Statement and related materials, (iii) the expenses incurred by Okapi Partners, LLC, the proxy solicitor, (iv) the public relations costs and (v) the fees and expenses of Dewey & LeBoeuf LLP and Abrams & Bayliss LLP, up to $1,000,000.

9.                  The parties hereto agree to issue a joint press release in a form mutually agreed to by the parties.  The parties hereto agree not to say anything disparaging about each other in connection with the matters contained herein or the negotiations leading up to this Agreement.

10.                The Company agrees that as promptly as practicable following the date hereof, the Company shall take all steps reasonably necessary to amend and refile as amended with the SEC, the Proxy Statement on Schedule 14A filed by the Company with the SEC on October 2, 2009 (the “Company Proxy”) to include the Designated Directors as “director nominees” (as used in the Company Proxy) thereunder.  The Company and the Board agree that the Company Proxy (as amended pursuant to the terms of this Agreement) and all other solicitation materials to be delivered to stockholders in connection with the 2009 Annual Meeting shall be prepared in accordance with, and in furtherance of, this Agreement.  The Company will provide Value Investors for Change with copies of any

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proxy materials or other solicitation materials to be delivered to stockholders in connection with the 2009 Annual Meeting at least one business day, in the case of proxy statements, and at least one business day, in the case of other solicitation materials, in advance of filing such materials with the SEC or disseminating the same in order to permit Value Investors for Change a reasonable opportunity to review and comment on such materials.  Value Investors for Change will provide, as promptly as reasonably practicable, all information relating to the Designated Directors (and other information, if any) to the extent required under applicable law to be included in the Company Proxy (as amended in accordance with the terms of this Agreement) and any other solicitation materials to be delivered to stockholders in connection with the 2009 Annual Meeting. The Company Proxy, as amended pursuant to the terms of this Agreement, shall contain the same type of information concerning the Designated Directors as provided for the incumbent director nominees.

11.                Each of Spencer Capital Management, LLC, Spencer Capital Partners, LLC, Value Fund Advisors, LLC, Boston Avenue Capital, LLC, Yorktown Avenue Capital, LLC and Spencer Capital Opportunity Find, LP shall keep confidential all Confidential Information learned through Board participation of the Designated Directors unless disclosure is required by applicable laws or regulations or by a regulator having jurisdiction over such party.  The term “Confidential Information” shall mean any information that is confidential to the Company; provided that Confidential Information will not include information which (i) becomes lawfully available to the public other than as a result of a disclosure by such party or its representatives, (ii) was lawfully available to such party on a non-confidential basis prior to its disclosure by the Company or its representatives or (iii) lawfully becomes available to such party on a non-confidential basis from a source other than the Company or the Company’s representatives or agents, provided that such source is not bound by a confidentiality agreement with the Company of which such party has been made aware.

12.                The parties hereto agree that irreparable damage would occur if any provision of this Agreement were not strictly performed in accordance with its terms and that each party to this Agreement shall be entitled to an injunction to prevent breaches of this Agreement and to enforce specifically the performance of the provisions hereof, in addition to any other remedy to which any party may be entitled at law or in equity.  In addition, the nonperforming party shall pay the costs and expenses of the other party in obtaining such injunction and/or specific performance, including, without limitation, attorneys’ fees.

13.                The validity, interpretation, performance and enforcement of this Agreement shall be governed by the laws of the State of Delaware (without giving effect to any choice or conflict of law provision).  The Parties hereby irrevocably and unconditionally consent to the exclusive jurisdiction of the courts of the State of Delaware located in Wilmington, Delaware for any action, suit or proceeding arising out of or relating to this Agreement.  The Parties further hereby irrevocably and unconditionally waive any objection to the laying of venue of any action, suit or proceeding arising out of or relating to this Agreement in such courts and hereby further irrevocably and unconditionally waive and agree not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum.

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14.                All notices, demands and other communications to be given or delivered under or by reason of the provisions of this Agreement shall be in writing and shall be deemed to have been given (a) when delivered by hand (with written confirmation of receipt), (b) upon sending if sent by electronic mail or facsimile, with electronic confirmation of sending, (c) one (1) day after being sent by nationally recognized overnight carrier to the addresses set forth below or (d) when actually delivered if sent by any other method that results in delivery (with written confirmation of receipt):

If to the Company:

MRV Communications, Inc.

20415 Nordhoff Street

Chatsworth, California 91311

Attn: Jennifer H. Painter

Facsimile: (818) 407-5867

with a copy to:

Sullivan & Cromwell LLP

1701 Pennsylvania Ave. N.W., Suite 700

Washington, D.C. 20006

Attn:  Janet T. Geldzahler

Facsimile: (202) 293-6330

If to Value Investors for Change:

Spencer Capital Management, LLC:

1995 Broadway, Suite 1801

New York, New York 10023

Attn:  Dr. Kenneth Shubin Stein

Facsimile:  (646) 349-9642

with a copy to:

Dewey & LeBoeuf LLP

1301 Avenue of the Americas

New York, New York 10019

Attn:  John Altorelli, Esq.

Facsimile: (212) 259-6580

in each case, or to such other address as the Person to whom notice is given may have previously furnished to the others in writing in the manner set forth above.

15.                This Agreement sets forth the complete and exclusive statement of the terms of the Agreement between the Parties hereto and fully supersedes any and all prior agreements or understandings between the Parties hereto pertaining to the subject matter hereof.

16.                Should any part, term or provision of this Agreement be declared or determined by any court to be illegal, invalid or otherwise unenforceable, the legality, validity and enforceability of the remaining parts, terms or provisions hereof shall be

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deemed not to be affected, and the Agreement shall be interpreted and enforced as if such illegal, invalid or unenforceable part, term or provision, to the extent possible, is not contained herein.

17.                The Parties acknowledge and agree that they participated jointly in the negotiation and drafting of this Agreement and the rule of construction that ambiguities are construed against the drafter is hereby waived.

18.                This Agreement may not be modified, amended, supplemented, or terminated except by a written instrument executed by the Parties hereto.

19.                All the terms and provisions of this Agreement shall inure to the benefit of and shall be enforceable by the successors and permitted assigns of the parties hereto.  No Party shall assign this Agreement or any rights or obligations hereunder without the prior written consent of the other Parties hereto.

20.                This Agreement may be executed in one or more counterparts, each of which shall be an original, and all of which together shall be deemed to be one and the same Agreement. Executed counterparts may be delivered via e-mail in Portable Document Format (.pdf) or via facsimile transmission.

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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the day and year first above written.

MRV COMMUNICATIONS, INC.
By:	/s/ Noam Lotan
	Name:	Noam Lotan
	Title:	Chief Executive Officer
SPENCER CAPITAL MANAGEMENT, LLC
By:	/s/ Dr. Kenneth Shubin Stein
	Name:	Dr. Kenneth Shubin Stein
	Title:	Managing Member
SPENCER CAPITAL PARTNERS, LLC
By:	/s/ Dr. Kenneth Shubin Stein
	Name:	Dr. Kenneth Shubin Stein
	Title:	Managing Member
SPENCER CAPITAL OPPORTUNITY FUND, LP
By:	SPENCER CAPITAL PARTNERS, LLC
	General Partner
By:	/s/ Dr. Kenneth Shubin Stein
	Name:	Dr. Kenneth Shubin Stein
	Title:	Managing Member
/s/ Dr. Kenneth Shubin Stein
DR. KENNETH SHUBIN STEIN
BOSTON AVENUE CAPITAL LLC
By:	/s/ Stephen J. Heyman
	Name:	Stephen J. Heyman
	Title:	Manager
YORKTOWN AVENUE CAPITAL, LLC
By:	/s/ Stephen J. Heyman
	Name:	Stephen J. Heyman
	Title:	Manager

VALUE FUND ADVISORS, LLC
By:	/s/ Charles M. Gillman
	Name:	Charles M. Gillman
	Title:	Manager
	/s/ Charles M. Gillman
	CHARLES M. GILLMAN
	/s/ Michael McConnell
	MICHAEL MCCONNELL

EX-99.1

Exhibit 99.1

MRV Files 2008 Form 10-K; Restates Past Financial Statements

CHATSWORTH, CA — October 12, 2009 —MRV COMMUNICATIONS, INC. (Pink Sheets: MRVC) announced that it has filed its Annual Report on Form 10-K stating its results for the year ended December 31, 2008 with the Securities and Exchange Commission (“SEC”). The filing of the Form 10-K concludes the restatement of its financial statements with respect to review of its historical option granting practices and related accounting as well as other issues.  MRV grew consolidated revenue by 20 percent to approximately $538 million, a record for the company.

“Fiscal 2008 was a notable year for MRV as all three of our operating segments achieved record revenue,” said Noam Lotan, chief executive officer of MRV. “Specifically, our two networking segments, our Network Equipment business and our Network Integration business, each generated record revenue of $126 million and $226 million, respectively, and revenue for our Optical Components group grew to $202 million. Our Network Equipment business grew meaningfully throughout the first nine months of the year but in the fourth quarter as the impact of the recession surfaced, revenue declined slightly year-over-year. The operating performance of the Network Equipment business significantly improved during 2008, despite a $6 million charge for goodwill impairment, and the Network Integration business delivered approximately $9 million in operating income.  Revenue of our Optical Components group, which consists substantially of our subsidiary Source Photonics, Inc., grew by 39 percent, which was partially driven by our acquisition of Fiberxon, Inc., as well as sales of PON components and datacom/telecom network components.

“We believe we are well positioned to benefit from increasing demand for bandwidth and key industry growth drivers, such as the increasing adoption of Carrier Optical Ethernet and the deployment of Fiber-to-the-Premise networks around the world.  I’m pleased that our business fared better than many although we were not immune to the global economic climate and both our revenue and operational results were affected in the fourth quarter of 2008 and into 2009,” continued Lotan.

“I am especially pleased to have filed our 2008 10-K as it represents a fresh start after a long and arduous process.  Now that this issue is behind us, we are able to focus our efforts on MRV’s future. While we continue to emphasize innovation and growth, consistent profitability is very much a priority and focus for MRV.  Gaining market share is still a priority, but we need to take a balanced approach and leverage our position in the market into bottom line results and we are committed to doing so,” concluded Lotan.

Operating expenses for the year were $270 million, which included an approximate $100 million non-cash charge for goodwill impairment primarily arising from the Fiberxon acquisition, and $9 million in fees related to the restatement.  Without these charges, operating expenses in 2008 would have been $161 million, or 30 percent of revenue.  Operating expenses for the full year 2007 were $138 million, or 31 percent of revenue.

Net loss for 2008 was $123 million, or a loss of $0.78 per share, which includes non-cash charges of $113 million related to the goodwill impairment, amortization of intangible assets recognized in the acquisition of Fiberxon, and share-based compensation expense.

Further details on MRV’s 2008 financial results may be found in the Form 10-K that the Company filed with the SEC on October 8, 2009.

Filing restated financial statements

On June 5, 2008, MRV announced that, as a result of a discovery and preliminary analysis by management of information relating to its stock option practices during the period from 2002 through the first quarter of 2004, its Board had established a special committee of independent directors (“Special Committee”) to conduct an independent investigation to review the Company’s historical stock option practices and related accounting and other issues. Management then conducted a detailed review of the historical documentation gathered by the Special Committee to determine the adjustments necessary to correct the accounting errors. The scope of the review was extensive and included the Company’s entire stock option granting history from the first grant on February 23, 1994 to the last grant on May 1, 2008.  It included a detailed review of the option grant procedures and available grant documentation in order to determine the appropriate measurement dates, and therefore, determine the adjustments necessary to correct for errors in the accounting for stock options.  The review indicated that many pre-2004 option grant dates and prices were retrospectively selected, and the Company did not recognize the appropriate compensation expense.

The Company has completed its review, and the Form 10-K filed with the SEC includes restated financial statements for the periods through December 31, 2007. The Company also restated the unaudited quarterly financial information and financial statements for interim periods of 2007 and the unaudited condensed financial statements for the three months ended March 31, 2008.

The adjustments made in the restated consolidated financial statements related to three broad categories of transactions: (1) share based compensation and related tax effects, (2) non-share compensation issues, and (3) acquisition related accounting treatment and other accounting issues.  There were no adjustments to previously reported revenue.

On August 26, 2009, the Company received a letter from the SEC stating that its investigation into MRV’s historical stock option grants and practices has been completed and that the Staff of the SEC does not intend to recommend any enforcement action.

As more fully described in the Annual Report on Form 10-k, the net adjustment to accumulated deficit through December 31, 2007 was approximately $69.9 million, of which $67.5 million related to periods prior to 2006. As a result of the stock option adjustments, MRV recorded additional non-cash, pre-tax share-based compensation, net of forfeitures, of $74.4 million for the years 1994 through 2007. Adjustments related to other compensation issues increased accumulated deficit by $6.3 million, and adjustments to correct errors

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related to acquisition accounting and other issues resulted in a net decrease in accumulated deficit of $10.8 million, including the reversal of $20.5 million in goodwill impairment charges related to goodwill that should not have been recorded.

About MRV Communications, Inc.

MRV Communications, Inc. is a leading networking company with a full line of packet-optical transport (“POTS”), carrier Ethernet, 40G and out-of-band networking equipment, services and optical components for high-speed carrier and enterprise networks and specialized aerospace, defense and other communications networks. MRV’s networking business provides equipment for commercial customers, governments and telecommunications service providers. MRV markets and sells its products worldwide, with operations in Europe that provide network system design, integration and distribution. The Company’s optical components business which provides optical communications components for access and Fiber-to-the-Premises applications operates under the Source Photonics brand. For more information about MRV and its products, please call (818) 773-0900 or visit www.mrv.com and www.sourcephotonics.com.

Forward-Looking Statements

This press release contains forward-looking statements about MRV, which involve risks and uncertainties. These statements are based on management’s current plans, expectations, estimates, forecasts and projections about MRV and its consolidated businesses and the respective market segments in which MRV’s businesses operate, in addition to management’s assumptions.

The statements in this press release regarding MRV’s future financial and operating results, market position, and other forward-looking statements which are not statements of historical facts, constitute forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements are not guarantees of future performance or that the events anticipated will occur or that expected conditions will remain the same or improve. These statements involve risks, uncertainties and assumptions, the likelihood of which are difficult to assess and may not occur, including risks that a) MRV will not get current with its quarterly reports on Form 10-Q with the SEC, b) each of MRV’s business segments may not make the expected progress in its respective market, c) the Company’s long-term strategy to return to profitability may not achieve anticipated results; d) MRV may have difficulties with its relationships with MRV’s customers and suppliers due to the Company’s previous delisting from the Nasdaq Stock Market and restatement of its financial statements, e) MRV may not succeed in developing, introducing and shipping product enhancements and new products, f) MRV will face increased competition in our market segments, g) there is political instability in areas of the world in which MRV operates, h) consolidation of MRV’s manufacturing operations in China will cause more pronounced effects if there is a disruption to the manufacturing facilities; i) currency fluctuations or changes in accounting rules will negatively affect MRV’s results, j) general economic conditions or economic conditions specific to our market segments will deteriorate further, k) of the Company may not be able to maintain its manufacturing operations and intellectual property rights in Asia, l) litigation related to MRV’s historical stock option granting practices and its acquisition of Fiberxon, Inc. may negatively affect the Company’s results of operations, and m) the Company will not be able to maintain its inventory and production backlog at acceptable levels. Therefore, actual outcomes, performance and results may differ from what is expressed or forecasted in such forward-looking statements and such differences may vary materially from current expectations.

All information in this press release is as of the date of this press release. MRV undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in MRV’s expectations.

Investor Relations	The Blueshirt Group for MRV
MRV Communications, Inc.	Maria Riley
Investor Relations	(415) 217-2631
(818) 886-MRVC (6782)	maria@blueshirtgroup.com
ir@mrv.com

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